By David M. Walker

Oct. 1, 2013 is a focus of increasing anxiety in this country. That’s the date when enrollments begin for the federally run health insurance exchanges, created under the Affordable Care Act (ACA). No one really knows what to expect, but it could be far worse than advertised —and for a reason that has more to do with the federal deficit than health care.

What’s anticipated is unsettling enough. President Obama speaks of inevitable “glitches and bumps” in the implementation. Senate Finance Committee Chairman Max Baucus (D-Mont.) sees the possibility of “a huge train wreck” if the public isn’t adequately educated and prepared. Supporters of the ACA, especially Democrats in the Congress, are nervous about taking the blame if the exchanges don’t unfold as intended.

All these worries are legitimate. The American people, already burdened by a numbingly complex, inefficient and inequitable tax system, now wonder if an increasingly government-run health care system will follow suit. Many are concerned that some employers will dump their current health care plans and pay the relatively modest fine. There’s also worry that young people will opt out of the exchanges (preferring to pay the small penalty), leaving the exchanges with a disproportionately older and sicker pool. Then there’s the very real uncertainty surrounding the ACA’s ultimate cost — illustrated by the impact of Medicare alone, which the Office of the Chief Actuary of Medicare estimates could cost cost $10 trillion more than claimed.

Amid all these concerns and speculations, almost no attention is being paid to the opportunity that the ACA’s insurance exchanges could represent for state and local governments’ retiree health care programs. It’s time to think about it because the consequences could be far-reaching.

States in a deep hole

We already know that many state and local governments are in a financial hole that keeps getting deeper. A newly released report by the U.S. Government Accountability Office (GAO) makes clear that, absent significant reforms, the fiscal picture for most state and local governments will steadily worsen through 2060. A main cause, in addition to Medicaid, is the cost of health care for state and local government retirees. These largely unfunded obligations are similar to the pressures on the federal government to fulfill its unrealistic Medicare promises.

Continue reading “When Retiree Benefits and Obamacare Collide”

By Berenson, Pronovost & Krumholz

While working to develop a broad set of outcome measures that can be the basis for attaining the goals of public accountability and information for consumer choice, Medicare should ensure that the use of performance measures supports quality improvement efforts to address important deficiencies in how care is provided, not only to Medicare beneficiaries but to all Americans.

CMS’ current focus on reducing preventable rehospitalizations within 30 days of discharge represents a timely, strategic use of performance measurement to address an evident problem where there are demonstrated approaches to achieve successful improvement [6]. Physicians and hospital clinical staff, if not necessarily hospital financial officers, generally have responded quite positively to the challenge of reducing preventable readmissions.

CMS has complemented the statutory mandate to provide financial incentives to hospitals to reduce readmission rates by developing new service codes in the Medicare physician fee schedule that provide payment to community physicians to support their enhanced role in assuring better patient transitions out of the hospital in order to reduce the likelihood of readmission [7]. CMS recently announced that after hovering between 18.5 percent and 19.5 percent for the past five years, the 30-day all-cause readmission rate for Medicare beneficiaries dropped to 17.8 percent in the final quarter of 2012 [8], simplying some early success with efforts to use performance measures as part of a broad quality improvement approach to improve a discrete and important quality and cost problem.

However, this Timely Analysis of Immediate Health Policy Issues 3“CMS’ current value-based purchasing efforts, requiring reporting on a raft of measures of varying usefulness and validity, should be replaced with the kind of strategic approach used in the national effort to reduce bloodstream infections.”approach is not without controversy.

Improvements have been modest, and some suggest that readmission rates are often outside the hospital’s control, so CMS’ new policy unfairly penalizes hospitals that treat patients who are the sickest [9]. And while readmission in surgical patients is largely related to preventable complications, readmissions in medical patients can be related to socioeconomic status. Also, some have questioned the accuracy of CMS’ seemingly straightforward readmission rate measure, finding that some hospitals reduce both admissions and readmissions—a desirable result—yet do not impact the readmission rate calculation [10]. And one of this paper’s authors (R. Berenson) has suggested a very different payment model that would reward hospital improvement rather than absolute performance, thereby addressing the reality that hospitals’ abilities to influence readmission rates do vary by factors outstside of their control [11].

Continue reading “2. Use quality measures strategically, adopting other quality improvement approaches where measures fall short.”

By Anubhav Kaul, MD and Sindhu Kubenderan

Critically ill Medicare patients, who are battling for stable health at the end of life, are victims of repeated hospitalizations, especially after being discharged to a skilled nursing facility (SNF).  The cycle of hospitalizations is an indicator of poor care coordination and discharge planning – causing the patient to get sicker after every “bounce back” to the hospital.  Total spending for SNF care was approximately $31 billion in 2011; with an estimated one in four patients being re-hospitalized within thirty days of discharge to a SNF.[1]

Each readmission leads to further test and treatments, higher health care costs, and most importantly, patient suffering.  It is hard to imagine that patients would prefer to spend their last few months of life shuttling from one healthcare setting to another and receiving aggressive interventions that have little benefit to their quality and longevity of life.  The heroic potential of medical care should not compromise the patient’s opportunity to die with dignity.   A hospital is not a place to die.

Medicare beneficiaries are eligible to receive post-acute care at SNFs, after a three day hospital admission stay.  SNFs provide skilled services such as post-medical or post-surgical rehabilitation, wound care, intravenous medication and necessities that support basic activities of daily living.  Medicare Part A covers the cost of SNF services for a maximum of 100 days, with a co-payment of $148/day assessed to the patient after the 20^th day.  If a patient stops receiving skilled care for more than 30 days, then a new three day hospital stay is required to qualify for the allotted SNF care days that remain on the original 100 day benefit.  However, if the patient stops receiving care for at least 60 days in a row, then the patient is eligible for a new 100 day benefit period after the required three day hospital admission.[1]  It is evident that the eligibility for the Medicare SNF benefit is dependent on hospitalizations – many of which may be a formality and a source of unnecessary costs.

Continue reading “The Bounce Back Effect”

By Richard Kaplan

The Sound Bite:

Increased longevity costs will bankrupt medicare.

Fact or Fiction?

This is partly fact, partly fiction. Medicare entitlement begins when a person ages in at 65, however just because beneficiaries are living longer does not necessarily mean higher Medicare costs.

The customary formulation of this myth is that Medicare is doomed by its own success in keeping its beneficiaries alive. Not only will the ranks of the program’s beneficiaries increase as the vaunted baby boom generation reaches the statutory age of eligibility, but because people are staying alive longer, Medicare’s costs will explode. The first part of this contention is indisputably true: entitlement to Medicare occurs when a person reaches age sixty-five, and the baby boom generation that is generally calibrated as starting in 1946 has arrived at that threshold. As a result, additional Medicare beneficiaries enter that program every day, and because the baby boom generation dwarfs any preceding age cohort, it is highly likely that more beneficiaries will be added to the program than are lost as older beneficiaries pass away. Consequently, the number of Medicare beneficiaries will inexorably increase over the next decade or so. Ceteris paribus, more beneficiaries mean higher aggregate costs.

The second part of the contention, however, is myth. Just because today’s Medicare beneficiaries live longer than did their predecessors does not necessarily translate into higher costs for the Medicare program. The source of this apparently counterintuitive proposition is the panoply of programmatic limitations that Medicare imposes on its coverages, regarding the myth that Medicare pays for long-term care. More specifically, beneficiaries who live longer typically do incur higher cumulative health care costs over their post-sixty-five lifetimes, but many of those costs are not borne by the Medicare program. This phenomenon is well illustrated by the following graph from an important analysis that appeared in The New England Journal of Medicine:

FIGURE 1: Cumulative Health Care Expenditures From the Age of 65 Years Until Death, According to the Type of Health Service and the Age of Death

Continue reading “Fact Check:Will Increased Longevity Bring Down Medicare?”

By John Schumann, MD

Lost in the weeds of President Obama’s budget proposal is a 10-year, $11 billion reduction in Medicare funding for graduate medical education (GME). GME is the “residency” part of medical training, in which medical school graduates (newly minted MDs and DOs) spend 3-7 years learning the ropes of their specialties in teaching hospitals across the country.

Medicare currently spends almost $10 billion annually on GME. One-third of that is for “Direct Medical Education” (DME), which pays teaching hospitals so that they in turn can provide salaries and benefits to residents (current salaries average around $50,000/year, regardless of specialty; there are variances by region). No problem there.

The proposed cuts come from the Medicare portion known as “Indirect Medical Education” (IME) payments. Though IME accounts for two-thirds of the Medicare GME pie, it’s not easy for hospitals to itemize what exactly it is they provide for this significant amount of funding. Instead, hospitals bill Medicare based on a complex algorithm that includes the ‘resident-to-bed’ ratio, among other variables.

A 2009 Rand Corporation study commissioned by Medicare to evaluate aspects of residency training called on the government to tie IME payments directly to improvements in educational and hospital quality, lest the money be perceived to be going down a series of non-specific sinkholes. That idea has caught on, and legislators in both parties now see the healthy IME slice of Medicare education funding as a plum target for cost-cutting, as the direct benefits are difficult to enumerate, let alone quantify.

This has medical educators very worried that we will have to do more with much less (disclosure: I am one).

Continue reading “Will Your Health Insurer Pay to Train Your Doctor?”

By Leslie Kernisan, MD

A few weeks ago, The Health Care Blog published a truly outstanding commentary by Jeff Goldsmith, on why practice redesign isn’t going to solve the primary care shortage. In the post, Goldsmith explains why a proposed model of high-volume primary care practice — having docs see even more patients per day, and grouping them in pods — is unlikely to be accepted by either tomorrow’s doctors or tomorrow’s boomer patients. He points out that we are replacing a generation of workaholic boomer PCPs with ”Gen Y physicians with a revealed preference for 35-hour work weeks.” (Guilty as charged.) Goldsmith ends by predicting a “horrendous shortfall” of front-line clinicians in the next decade.

Now, not everyone believes that a shortfall of PCPs is a serious problem.

However, if you believe, as I do, that the most pressing health services problems to solve pertain to Medicare, then a shortfall of PCPs is a very serious problem indeed.

So serious that maybe it’s time to consider the unthinkable: encouraging clinicians to become Medicare PCPs by aligning the job with a 35 hour work week.

I can already hear all clinicians and readers older than myself harrumphing, but bear with me and let’s see if I can make a persuasive case for this.

Continue reading “An Indecent Proposal That Just Might Solve the Primary Care Crisis: Meet the 35 Hour Work Week”

By John Wasik

The dreaded sequester cuts mandated by the Budget Control Act of 2011 went into effect this month, putting into place a 2 percent cut in Medicare spending.

While Congress can still enact a “fix” that will delay or amend these cuts, that seems unlikely as of this writing. Yet how the cuts will impact Medicare and its nearly 50 million beneficiaries is a still a moving target.

In a joint study issued September 2012 by the American Hospital Association, the American Medical Association and the American Nurses Association, it was estimated that some 766,000 jobs would be lost by 2021 if the sequester cuts went into effect.

According to the study, “Researchers forecast that more than 496,000 jobs will be lost during the first year of sequestration, and these cuts will impact health-care sectors in every state. In California alone, the health sector could lose more than 78,000 jobs by 2021.”

Continue reading “So Who Gets Hurt By the Sequester?”

By MICHAEL L. MILLENSON

The recent news that thousands of seniors with cancer are being denied treatment with expensive chemotherapy drugs as a result of sequestration-mandated budget cuts raises the question of whether other patients are being equally harmed, but less visibly.

A careful study of the impact of past federal budget cutting suggests a troubling answer. That study, in a National Bureau of Economic Research Working Paper published in 2011 and revised last year, established an eerily direct link between slashing hospital reimbursement and whether Medicare patients with a heart attack live or die.

Using data from California hospitals, researchers Vivian Y. Wu of the University of California and Yu-Chu Shen of the Naval Postgraduate School examined mortality rates for heart attack patients following the Medicare payment cuts resulting from the Balanced Budget Act (BBA) of 1997. The impact of the BBA was not as sudden or clear as the current situation, where Medicare’s two percent across-the-board cut on April 1 instantly transformed some expensive chemotherapy drugs into money losers, but it was significant and long-lasting.

The researchers examined hospitals claims data for a three-year period before the BBA, a three-year period when the BBA first took effect and, finally, a six-year period after budget cuts had either permanently changed care or failed to do so. They also tried to adjust for the severity of illness of the heart attack patients – the condition is formally known as acute myocardial infarction (AMI) – and other factors.

In the end, the researchers were able to trace a clear path from Congressional budget decisions to the patient’s bedside. Payment reductions triggered by the BBA , Wu and Shen concluded, led to “worse Medicare AMI patient outcomes, and more importantly, that the adverse effect only became measurable several years after the policy took place.”

They even quantified the effect: every thousand dollars of Medicare revenue loss from the BBA translated to a six to eight percent increase in mortality rates from heart attack. Continue reading “Why Medicare Cuts Will Quietly Kill Seniors”

By Hank Pomeranz

Every day, over 7,600 baby boomers turn 65. By 2029, this number will rise to over 11,000. As more and more Americans approach senior citizenship, health care for seniors through Medicare becomes increasingly relevant. The question is, how will this affect you?

We all have questions about how the current budget battle and resulting spending cuts are going to impact Medicare. It seems unavoidable that Medicare costs will have to be reduced in some manner. Both Democrats and Republicans have proposed fixes to counteract these budget cuts. President Obama, in his State of the Union address, recommended adjustments to Medicare Part D that would enforce mandatory rebates–in other words, price controls–on drug companies.

But we need to ask ourselves: why would we make changes to the most successful part of Medicare by far? Polls indicate that 90 percent of seniors are happy with their current Part D coverage. Not only is Part D popular; it is also cost effective. It has cost 30 percent less than originally estimated. Premiums are an average of half the price originally estimated. Meanwhile, price controls are estimated to increase drug costs by 40 percent. Clearly, they are not the answer to cutting Medicare costs.

Continue reading “A Model for Health Care Reform:Would You Guess Medicare Part D?”

By Bob Wachter, MD

In the past, neither hospitals nor practicing physicians were accustomed to being measured and judged. Aside from periodic inspections by the Joint Commission (for which they had years of notice and on which failures were rare), hospitals did not publicly report their quality data, and payment was based on volume, not performance.

Physicians endured an orgy of judgment during their formative years – in high school, college, medical school, and in residency and fellowship. But then it stopped, or at least it used to. At the tender age of 29 and having passed “the boards,” I remember the feeling of relief knowing that my professional work would never again be subject to the judgment of others.

In the past few years, all of that has changed, as society has found our healthcare “product” wanting and determined that the best way to spark improvement is to measure us, to report the measures publicly, and to pay differentially based on these measures. The strategy is sound, even if the measures are often not.

Continue reading “Measuring the Quality of Hospitals and Doctors: When Is Good Good Enough?”